]]>Product Hunt’s happy hour starts in 20 minutes, and the line stretches far down the street. As I stroll through Geary, blocks from the bar, I’m convinced the crowds must be gathering for a Diplo concert or something. There’s no way this many people showed up for drinks with the young, Andreessen-Horowitz backed tech company.

But I am wrong. The public Facebook event invite reached 312,000 news feeds, 16,000 people viewed the event page and 3,700 RSVPed. The bar only fits 1,200 people. Half an hour before the start time, hundreds of people have showed up early to Product Hunt’s fifth official Happy Hour, trying to make sure they get in.

The line outside Product Hunt’s happy hour, 20 minutes before the event begins, wraps around the corner and down the street

The people in line may be there to bask in Product Hunt’s limelight, but they’re not too pleased about the wait. One young man near the front mutters, “Sure, it’s popular, but I don’t know if it can monetize.” His friend says, “Maybe they’ll raise money on Kickstarter. They have a great community.”

Blocks away, a few friends stop short when they see the hordes of people waiting in line. They swear loudly and snort, “Never mind.”

The snaking queue of fans leads right to the door of the bar 620 Jones, rented out for the night. Ryan Hoover, Product Hunt founder and CEO, meets me inside. He hasn’t checked out the line snaking around the corner yet and is nervous to stroll past it, lest he get mobbed by tech groupies. He tells me he prefers smaller events but knew a lot of people would want to come to this.

Much like Twitter, Facebook or Reddit, Product Hunt needs a loyal user base of people posting content to survive. Offline events help these users develop connections with each other, leading to a sense of community, which is not an easy thing to build. That in turn intensifies their loyalty to the application.

The bouncer starts slowly letting in clusters of people and Hoover disappears into the masses. Not for the first time, I find myself wondering how his life has changed with his newfound fame. Although he’s a confident person, he’s a self-admitted introvert who gathers his energy in moments of solitude. At the last Product Hunt happy hour, a smaller event that happened pre-funding, he snuck away early while the party still raged.

Ryan Hoover, founder of Product Hunt, in the empty bar minutes before the happy hour crowds were unleashed

The soft red lights of 620 Jones give everything a chic, sophisticated vibe. Top 40 music pulses in the background as founders, techies, PR people, salesmen and reporters mingle. Many of the people I speak with have never used Product Hunt, but they’ve heard of the company and wanted to familiarize themselves – or be associated with it.

“I didn’t know what it was, but I saw the Facebook event group and thought I should find out,” a social media professional in pointed heels and a tailored dress tells me. Her friend, a publicist for the firm that represents Yik Yak, nods beside her in agreement.

When I ask a co-founder of an online music merchandise service why he came, he says, “I don’t know. It’s a viral thing. People feel like they have to be a part of it but they’re not sure why.”

Two women chat during Product Hunt’s happy hour

Many attendees are huge fans and recognize Hoover on the spot. Two women from CODE2040, a nonprofit formed to encourage diversity in technology, ask him questions over the throbbing bass. A man interrupts them to frantically show off his social app, before being interrupted by another man wearing an ironic t-shirt.

An older, reserved fellow nursing a glass of wine at the bar tells me his company is one of the sponsors of the drinks. He jokes that the company didn’t pay enough money to get its name anywhere at the event. He marvels at the fact that the event was so overbooked, even as sponsors they were initially told they could only put one person on the guest list.

Tech employees from Mattermark and Samsung chat during the Product Hunt happy hour

The crowd reminds me of the shifting nature of tech culture. I show up expecting nerds and geeks and instead see cashmere sweaters and polo shirts, slicked-back hair and biceps amid the hoodies and startup T-shirts.

Tech has gone mainstream and Product Hunt is the water cooler where the cool kids hang out. It’s a characterization I suspect Hoover would feel uncomfortable with, and it’s perhaps not representative of the app itself. But the app has become a brand that people want to be associated with, regardless of whether they’re using it.

There’s an inherent contradiction in Product Hunt’s business premise. It wants to be the place where early product adopters can come together, and it also wants to go big. If this happy hour turnout is any indication, it’s starting to achieve that.

But it will be challenging for a community that’s all about the early adopters to scale without losing its magic along the way. After all, if everyone is an early adopter, is anyone really an early adopter?

One line from this story has been removed since publishing because it happened during an off the record part of the interview.

]]>A noticeable tremor went through the U.S. media establishment on Monday, when well-respected New Yorker music critic Sasha Frere-Jones announced that he was leaving the venerable magazine to become the executive editor of a site many people have probably never heard of: called Genius, it was formerly known as Rap Genius. In a nutshell, it allows virtually anyone to annotate or make notes on any kind of text document, anywhere on the internet. Sounds like chaos, right?

As Foster Kamer and a number of other media insiders pointed out following the news, the fact that Frere-Jones might be interested in jumping from the magazine to an unproven digital-media startup shouldn’t come as a huge surprise, given that he did more or less the same thing in 2010, when he left the New Yorker to join The Daily — Rupert Murdoch’s ultimately futile (and expensive) attempt to build a tablet-based news organization.

Genius may not be backed by Rupert Murdoch, but it also isn’t a tiny, struggling startup: after raising money from leading Silicon Valley VC Andreessen Horowitz in 2012, the company raised a fairly massive $40 million last year, which valued the venture at about $500 million. Frere-Jones certainly wouldn’t be the first traditional journalist to be seduced by the prospect of a payoff in startup equity, along with the challenge of trying something new.

The holy grail of annotation

In a post at the Genius site, Frere-Jones talks about why he decided to join the company, including the fact that it appealed to him as a former musician (in an interview with the New York Times, he also said he was looking forward to not having to work so many nights). But one part of his post stuck out for me, and that was the part where he talked about how Genius is in sync with the essential nature of the web and “remix culture.”

“One of the web’s strengths is that it revises itself, admitting new information and incorporating dissenting views, rather than simply waving at them, regally. Genius is, by design, an open and unfinished text — a reader who doesn’t think an annotation is strong enough can log on and make that song page more robust.”

Over the past decade, there have been a number of attempts to “annotate the web,” including browser plugins that would display user-contributed notes beside a page and widgets that would pop up windows when you hit a site — Google even had one for awhile called Sidewiki — but not enough people ever used them. The impulse is a fundamentally web-like one, however: to allow anyone to contribute their knowledge on a topic, just as Wikipedia does.

In fact, Marc Andreessen of Andreesen Horowitz said when he invested in Genius that his interest in the company stemmed from the earliest days of his involvement in the consumer web, when he developed one of the first graphic web browsers, known as Mosaic. “It seemed obvious to us that users would want to annotate all text on the web – our idea was that each web page would be a launchpad for insight and debate about its own contents.” But the feature known as “group annotations” was too expensive to implement.

Like web comments, but better

As part of its attempt to bring this ability to everyone with a browser, Genius recently launched a new feature that allows a user to post an annotated version of a web page to the site with highlighted sections pointing to comments, as someone has done (predictably enough) with the New York Times story about Frere-Jones joining the site:

The problem with this kind of approach, of course, should be fairly obvious to anyone who has followed the evolution of Wikipedia — not to mention anyone who has seen and been repulsed by reader comments on news stories. The issue with comments is that plenty of people think they know something but actually don’t (or just want to scrawl the equivalent of verbal graffiti where everyone can see it), but the downside of the Wikipedia approach is that editing or contributing becomes something that only a tiny cabal actually does.

Genius inadvertently became an example of the downside of its free-for-all approach when co-founder Mahbod Moghadam posted some offensive and misogynistic comments on the manifesto written by multiple killer Elliott Rodger. Moghadam was eventually forced to resign, and the episode only reinforced the impression that Genius was run by “bro-grammers” with an over-inflated sense of their own worth (those who knew them in university, meanwhile, have described them as “potheads who debated Kierkegaard”).

How will it monetize?

At its best, Genius does something similar to what Quora has also been trying to do: it allows experts to add their perspective on a topic, like when finance experts annotated a piece about the future of Bitcoin. And to some extent it sounds like what Sasha Frere-Jones will be doing is acting as a kind of curator — selecting contributors who can add value — as well as helping site moderators determine which annotations to keep and which to jettison:

“I’ll bring in artists to tell the stories behind recordings and help correct errors. That doesn’t mean every artist annotation has to be a tablet delivered from on high – some of my favorites are nothing like that, and show that stars can be self-deprecating, too. I’ll also be looking to expand our circle of contributors as well — people who’ve lurked, people who’ve been curious, some who’ve been critical.”

Much like early web communities such as Slashdot, Genius deputizes its own members to moderate the annotations: annotations must be approved by users, and over time regular contributors can earn what the site calls IQ points — which in turn allow them to remove comments or put users in the “penalty box,” a form of sanction that prevents them from doing anything for a specific period of time (Slashdot’s approach involves what it calls “karma” points, which give users the right to moderate).

Moderating bad behavior is one challenge, but what could be an even bigger one is monetizing the content that it annotates, as Vox writer Timothy Lee points out. Editing song lyrics or even web pages isn’t likely to be something that appeals to a vast number of people — just as only a tiny number of contributors ever edit a Wikipedia page. So where will Genius get the kind of engaged readership that will appeal to advertisers?

]]>DataGravity, the startup founded by Paula Long of EqualLogic fame, now has $50 million in new funding, bringing its total to a healthy $92 million.

This Series C round was led by new investor Accel Partners and Accel general partner Ping Li will join the DataGravity board, which already includes Peter Levine of Andreessen Horowitz, David Orfao of General Catalyst, Bruce Sachs of Charles River Ventures, and Brian Stevens of Google.

DataGravity says its storage array, available since October, will help companies wring more value out of the data they aggregate, and show them at the click of a button who’s looking at what information.

For example, a law firm is using the product to make sure, among other things, that case information isn’t being read “inappropriately”– that, say, secretaries are not looking at divorce cases and that no clear-case credit card or social security numbers are unprotected, Long said.

DataGravity will even tell you which data you’re storing that you should probably deep-six. If there’s non-critical stuff taking up space that no one’s looked at in a year or more, for example, it may be time to say goodbye.”We’re the only storage company that tells you to throw stuff out,” Long (pictured above) joked in an interview.

The Nashua, New Hampshire company will use its new cash to hire more sales and support staff. “We need support people who are really willing to help customers understand their data and to partner with them to get that value,” Long noted.

]]>As a number of sites reported Sunday night, Vox Media has closed a new round of financing worth $46.5 million, which gives the company a theoretical value of close to $400 million, or almost twice what Amazon CEO Jeff Bezos paid for the Washington Post. Vox’s round comes not long after a $50-million financing by BuzzFeed, which valued it at more than $800 million. New media platforms seem to be the flavor of the month in investment circles. But are their hopes misplaced?

As tech analyst Ben Thompson pointed out in an email to Stratechery subscribers about the news, one of the most noteworthy things about both of these deals is that they came from investors who have previously not shown any interest in media: BuzzFeed’s round was led by Andreessen Horowitz, and Vox’s was led by a little-known fund called General Atlantic.

A new taste for media

Until the BuzzFeed deal, Andreessen Horowitz had never invested in anything like a broad, consumer-focused media platform — although co-founder and former Netscape creator Marc Andreessen has invested a small sum personally in Pando Daily, and Andreessen Horowitz backed the site Rap Genius, which started out by annotating rap lyrics and has made an effort to do the same with news stories. But enterprise software has been its bread and butter.

General Atlantic, meanwhile — which invests money on behalf of the secretive co-founder of the Duty Free Shopping empire, Chuck Feeney — also tends to invest in industrial or enterprise-focused entities. Until Vox came along, Box and Squarespace were about the only brands in the fund’s investment portfolio that most consumers might recognize.

This suggests one of two things: Either a) both funds have run out of interesting things to invest in in other markets, or b) they believe the media market has changed in some fundamental way that makes these kinds of companies worth their time. And it’s not just bottom-feeding — Vox’s market value is about seven times its estimated revenue, and BuzzFeed’s valuation is likely in the same ballpark, figures that are historically pretty rich for media companies (the New York Times is valued at about 1.2 times its annual revenue).

The issue with media valuations is not whether Vox is good or not. It's about whether the digital model is actually a race to the bottom.

Vertical integration

Thompson argues that the big difference with both BuzzFeed and Vox is that they are not just content plays, but vertically-integrated technology platforms, something that Andreessen Horowitz partner Chris Dixon also mentioned when the company made its initial investment. Both companies have built their own publishing tools, their own analytical features and their own custom-content advertising businesses. As a General Atlantic partner told the New York Times:

“We think we are at an inflection point. For the next five years, you are going to have the next generation of media platforms emerge. There are parallels to cable in the ’80s. There is going to be a huge amount of value creation.”

This focus undoubtedly makes BuzzFeed and Vox worth more than media sites that rely on others for their technology platform or ad business — but it’s also worth pointing out that BuzzFeed in particular has a huge reliance on one third-party provider for the vast majority of its distribution, and that is Facebook. So far, the company has not suffered from repeated changes to Facebook’s content-ranking algorithms, but all it would take is one tweak and BuzzFeed’s traffic could go into freefall. That’s a significant risk.

Vox CEO Jim Bankoff said in a post on LinkedIn — which in turn was based on a letter to Vox employees — that the company isn’t concerned about relying on third-party platforms because “the best digital distribution platforms tune their services over time to reward the best and most relevant content from strong media brands.” But is that a statement of fact, or is it wishful thinking?

Humans don’t scale

Another factor that has likely changed the perception of BuzzFeed and Vox’s investment potential is that both have their own “native advertising” or sponsored content arms, which create custom material for brands and can therefore charge higher prices than many media companies get for their bog-standard banner ads and other content. But how sustainable are those margins?

I suspect the taste of content is going to get real bitter for venture capitalists within the next two years

The history of online advertising is one in which new ad forms or marketing methods continually emerge, only to become just as commoditized as their predeccesors. Native advertising may be more immune to this phenomenon than other kinds of content, but if it becomes the go-to solution for media monetization that many believe it to be, then it is going to face the same kinds of pressures that every other solution has.

The other awkward thing about media is that it still relies on one of the most financially inefficient content-production methods ever invented — namely, human beings. As one venture investor once told me, “human beings don’t scale.” The next writer or editor or content producer is just as expensive as the first one, and that makes it difficult to grow a media company to a truly global size — unless your producers work for free, as they do for Facebook and Twitter.

As someone who works in media, I’m obviously conflicted about these kinds of deals. On the one hand, I would love to see more people invest. But will Andreessen Horowitz and General Atlantic see enough of a return to justify the half-billion or billion-dollar valuations they are putting on these platforms? I’m skeptical.

]]>Reddit, the online community known for its somewhat anarchic approach to content and behavior, has closed a $50-million Series B financing round that includes leading venture-capital firms Andreessen Horowitz and Sequoia Capital. And in an interesting move befitting the company’s overall approach, 10 percent of the shares issued in the financing round will be given to Reddit users. But the money will likely intensify the pressure on the site to moderate its freedom-loving ways.

The round is being led by Sam Altman, the CEO of Y Combinator, the startup incubator where co-founders Alexis Ohanian and Steve Huffman first launched Reddit in 2005 — and among the individual investors who are participating in the financing are two Y Combinator partners: founder Jessica Livingston and Gmail creator Paul Buchheit (Ohanian recently became a partner at Y Combinator).

Hiring staff, giving back to the community

Altman’s involvement in particular was highlighted by the company in the funding announcement because he was a member of the same Y Combinator batch of companies that Ohanian and Huffman were in when they started the site, and was among its first users. In a nod to Reddit’s most popular feature, the company said Altman would be doing an Ask Me Anything interview on the site on Tuesday after the news announcement.

The funding gives Reddit more financial freedom than it has had in the past as a unit of Advance Publications, the parent company of the Conde Nast magazine family. Advance acquired the company in 2006 and spun it out three years ago as an independent entity, but retained control over its finances (and still owns more than half the shares, according to one report). The company’s blog post says the funding will allow it to expand in multiple areas:

We’re planning to use this money to hire more staff for product development, expand our community management team, build out better moderation and community tools, work more closely with third-party developers to expand our mobile offerings… improve our self-serve ad product, build out redditgifts marketplace [and] pay for our growing technical infrastructure.

In a somewhat unique move, Reddit also convinced all of the investors in the financing to give 10 percent of their shares to users, “in recognition of the central role the community plays in reddit’s ongoing success.” In a Reddit post about the fundraising, Wong said the site is thinking about creating its own crypto-currency that would be exchangeable for shares in the company. In another interesting twist, Altman also said he has given voting control over his shares to the company, as protection against “investors screwing it up.”

How does Reddit balance its goals?

As I tried to outline in a recent post, one of the most significant challenges for Reddit as it tries to justify the valuation it has been given is the tension between wanting to grow and reach a broader audience — and, most importantly, to reach advertisers who can help monetize the site — and the nature of the community itself. In other words, the difficulty of growing up without losing what made the site so successful in the first place.

Coincidentally enough, that tension was highlighted just as the rumors about the financing were being reported by Re/code and others, when Reddit played a key role in the dissemination of nude photos from the Apple iCloud accounts of celebrities such as actress Jennifer Lawrence and singer Ariana Grande.

A Reddit user set up a forum or sub-Reddit called The Fappening that was dedicated to the photos, until it was deleted by the site as a breach of Reddit’s rules (since the pictures were obtained illegally). That may have calmed the storm of outrage somewhat, but a number of users and critics pointed out that Reddit has hosted links to similar kinds of content — and has even defended doing so.

Wong himself was also criticized fairly heavily for his response to the iCloud photo postings, a blog post in which he described Reddit as “the government of a new type of community.” One site described it instead as a “failed state.” So if Reddit is a government, what kind will it be? One that lays down the law, or one that accepts some chaos and bad behavior as the price of freedom?

Freedom of speech vs. monetization

One of the most powerful things about Reddit as a community is the freedom that it gives users, and especially the freedom to create forums on whatever topics someone happens to be interested in, including disturbing content like pictures of female corpses and links to bestiality. Users can simply appoint themselves as moderators, and are rarely disciplined in any way unless something extreme happens, like the incident in which a user known as Violentacrez was removed from forums devoted to pictures of women taken without their consent.

Ohanian has talked in the past about the importance of Reddit’s commitment to free speech, even uncomfortable kinds of speech, and its commitment to anonymity — a principle that led the Reddit co-founder to invest in Secret, a controversial app.

But how are those principles going to jibe with a $500-million-plus valuation, and the need to attract advertisers and large media brands, or the desire to become more of a journalistic entity by giving users tools such as the live-reporting feature Reddit launched earlier this year? Those are serious goals, and much of the content and behavior on the site is either in direct or indirect opposition to those goals.

In its blog post about the funding, Reddit said “May the reddits continue on its course to its destiny interrupted.” But what exactly is its destiny? That remains unclear — and if anything the financing has made it even less clear.

]]>It’s more a cruel coincidence than outright irony, but Reddit finds itself this week at the confluence of two streams, and both of them sum up the site in different ways — one pointing towards the past, and one towards the future. At the same time that the site has come under fire for its role in distributing stolen nude photos of celebrities, it is also rumored to be working on a venture financing round that could value the company at more than half a billion dollars. Will Reddit’s desire for funding trump its legendary commitment to free speech?

Reddit wasn’t actively involved in the hacking of iCloud accounts that led to the publication of hundreds of nude photos of celebrities such as actress Jennifer Lawrence and model Kate Upton, but the site quickly created a forum or sub-Reddit devoted to the pictures — or rather, users of the site did, since one of the unique things about Reddit is that users can create any kind of forum they wish and appoint themselves moderators of it without the company’s approval.

Reddit is a microcosm of the wider Internet. All the good and horrible stuff that happens there happens elsewhere too.

Open government or failed state?

The site — which is majority owned by Advance Publications, the parent company of Conde Nast, who bought it in 2006 and spun it off in 2012 — has since removed the sub-Reddit known as The Fappening, and CEO Yishan Wong made a public statement about the move, in which he tried to make it clear what Reddit would do in similar cases. Unfortunately, his comments (both in a public blog post and in a subsequent posting on Reddit itself) seemed to make the situation worse, or at least more confusing. In his blog post, Wong said:

We understand the harm that misusing our site does to the victims of this theft, and we deeply sympathize. Having said that, we are unlikely to make changes to our existing site content policies in response to this specific event. The reason is because we consider ourselves not just a company running a website where one can post links and discuss them, but the government of a new type of community.

Many interpreted this as meaning Reddit would let any kind of content appear on the site, including violent pornography and other deviant or repulsive behavior, unless that content involved a copyright issue or had to do with celebrities who might launch a lawsuit. The Verge said that if Wong’s analogy to a government was to be taken at face value, then the site would have to be considered “a failed state,” since it allowed its residents to be subjected to all manner of violent imagery and abuse without taking action.

Free speech is a double-edged sword

There’s no question that Reddit is an anarchic environment, in much the same way that its predecessor 4chan is. The Awl published a list of sub-Reddits that few people would be prepared to discuss in normal social circles, including one devoted to bestiality, another dedicated to photos of attractive-looking female corpses, and so on. And yet, it is also responsible for a number of positive things as well (Redditors recently found someone’s missing father), and is seen by many as a force for good rather than evil.

empathy is hard. reddit is a rare place online where there are people actively thinking about how to express it and give more of it.

Reddit has been down this particular road a number of times already, including a public outcry involving a moderator known as Violentacrez, who ran a sub-Reddit devoted to pictures of women taken without their permission. After he was outed by Gawker — or “doxxed,” as a number of online communities call it when someone’s identity is revealed without their permission — the site removed him as moderator and banned the sub-Reddit. But others continue to be hosted that are just as bad, if not worse.

And yet, the site’s commitment to freedom of speech lies deep in its DNA, as co-founder Alexis Ohanian pointed out in a post earlier this year about his investment in Secret — an anonymous app that has also been criticized for the kind of abusive behavior it allegedly encourages in users, and for what some critics say is a lack of safeguards or protection for those who are targeted by abusers. At the time, Ohanian said:

Like all tools, this new publishing technology comes down to how we as individuals use it, but I’m heartened by every post I see that allows someone to share something about themselves that they’d never have been able to with their name attached… anonymity enables us to be truly honest, creative, and open.

Can Reddit bridge the gap?

The challenge for Reddit now is: How does it retain its commitment to such free-speech principles while it is trying to raise money from a group of what could be nervous or conservative venture funds? Twitter has also wrestled with its early commitment to being the “free-speech wing of the free-speech party,” and its desire to grow and generate revenue for its public shareholders has led to a form of quasi-censorship in which certain tweets and accounts are banned or hidden from users at the request of governments. But Twitter’s challenges are like a day at the beach compared with Reddit’s.

Remaining committed to free speech is hard enough when the speech you are trying to protect is violent or homophobic or repulsive in a number of other ways, but it becomes exponentially more difficult when you have investors with hundreds of millions of dollars on the line breathing down your neck. Will Reddit start to water down its commitment, in the hope that it can bridge those two divides without losing its soul? Or will it be forced to mimic Facebook, which routinely removes photos of women breast-feeding and never says why?

4chan founder Chris “Moot” Poole has talked about his commitment to free speech and the value of anonymous behavior, and also about how he never really seriously considered raising outside funding because he assumed the content of the site would make that impossible. Reddit is about to try and thread that particular needle, and what the site will ultimately look like after that process is anyone’s guess.

]]>Although the site he founded is seen by many as a kind of internet sideshow populated primarily by animated GIFs and listicles, BuzzFeed’s Jonah Peretti has always had his eye on a much larger prize: as he put it in an internal memo two years ago, he wants to build “a truly great publishing company for the digital age.” And now he has the backing to do so, thanks to a $50 million financing round led by Andreessen Horowitz that was announced late Sunday night — a round that reportedly values the company at $850 million. But can BuzzFeed make the transition to globe-spanning media entity without losing its new-media mojo?

What’s amazing about the company’s theoretical market value is that BuzzFeed didn’t even exist seven years ago, and legendary traditional media entities like the Washington Post have sold for a fraction of that value. The company is now worth almost half the market value of the New York Times, which has about 3,500 employees and revenues of $1.6 billion.

At Buzffeed's current valuation, each of its employees is worth three times as much as a New York Times employee.

Why should a digital media entity be so much more valuable than a traditional one? Andreessen Horowitz partner Chris Dixon, who was an early investor in BuzzFeed before he joined the Silicon Valley VC firm, explained in a blog post that they invested not just because they believe BuzzFeed is building what will become “a pre-eminent media company,” but because it has also built a technological platform for understanding how media works on the internet:

“BuzzFeed has technology at its core. Its 100+ person tech team has created world-class systems for analytics, advertising, and content management. Engineers are 1st class citizens. Everything is built for mobile devices from the outset. Internet native formats like lists, tweets, pins, animated GIFs, etc. are treated as equals to older formats like photos, videos, and long form essays.”

No longer a new-media toy

In his post, Dixon also talks about how BuzzFeed has been seen by many as “a toy,” and refers to an earlier post in which he discusses Clay Christensen’s theory that the next disruptive technology often starts out looking like a toy, and therefore catches competitors off-guard. In one of his previous memos to BuzzFeed staff, Peretti made a similar argument by describing the early years of the Time Inc. empire, which in the beginning was often criticized for aggregating news reports from other media entities — something BuzzFeed has also been slammed for doing.

Just like the disruptive companies that Christensen wrote about in The Innovator’s Dilemma, Dixon says BuzzFeed is moving up the value chain by adding more “serious” journalism, a process that started with the hiring of Ben Smith from Politico and has continued as the site has added long-form and investigative journalism to its repertoire. The company now has 200 editorial staff, and according to a news release is looking to expand rapidly, including the opening of a number of foreign offices in countries such as Japan, Mexico and India. It is also looking at acquisitions and is expanding its video unit.

The transition from being Peretti’s experimental media lab to serious global media entity — something the BuzzFeed founder talked about in an interview with Felix Salmon earlier this year — has not been without its speed bumps: in one of the most recent, BuzzFeed writer Benny Johnson was found to have plagiarized other news sources on more than 40 occasions and was fired. Ben Smith explained in an apology to readers that the site was founded as a “laboratory for content,” but that this “started changing a long time ago.”

Seems like $50M should have been invested in an *actual* news source like Al Jazeera, not in Buzzfeed.

The bet that Andreessen Horowitz and the other investors in BuzzFeed are making is that Peretti and his team can expand the company and make the transition to being a massive media entity (either that or be acquired for multiple billions of dollars) without losing the skills that got it there — the speed with which it has been able to generate content, and the ability to tune content so that it works with social networks like Facebook, Twitter and Pinterest. As Peretti put it in his interview with the New York Times:

“As we grow, how can we maintain a culture that can still be entrepreneurial? What if a Hollywood studio or a news organization was run like a start-up?”

Can the BuzzFeed model scale?

One of the risks that BuzzFeed faces is that the social tuning of content it does in order to help that content “go viral” could stop working, or at least stop working so successfully. Facebook in particular has been fine-tuning its own algorithms so that certain kinds of “low quality” content don’t show up as often in the newsfeeds of its users, and while these changes reportedly haven’t hurt BuzzFeed so far, that doesn’t mean they won’t do so in the future — although BuzzFeed is also less reliant on Facebook than it used to be: in fact, the company recently said that Pinterest drives more traffic than the giant social network does.

“If Facebook decides to tinker with its algorithms tomorrow, viral publishers could be gone in the blink of an eye.” http://t.co/F8OFOEH4PU

Another risk is that the sponsored-content arm that is responsible for the majority of BuzzFeed’s revenue — a kind of in-house studio called BuzzFeed Creative, which works with advertisers and agencies to create sponsored posts that are almost indistinguishable from the rest of the content — will stop being as effective. The site is currently generating what Dixon says will be “triple digit millions” worth of revenue this year, but more media entities are chasing the same sponsored-content rainbow because their existing revenue continues to decline. Andreessen Horowitz isn’t just betting that BuzzFeed will reinvent the news, but advertising as well.

One thing the financing does is reinforce the fact that BuzzFeed is one of the biggest bets on the future of media, along with VICE — which, like BuzzFeed, has reportedly been in acquisition talks that could value the company in the billions of dollars. All Peretti has to do now is build a media empire to rival Time Inc. without losing the new-media DNA that got BuzzFeed to where it is.

]]>Zenefits, the self-proclaimed “Workday for small businesses” now has $15 million in fresh funding from Andreessen Horowitz, Maverick and Venrock and named Lars Dalgaard who founded SuccessFactors, to its board.

That is no small matter. Dalgaard, now a general partner at Andreessen Horowitz, built SuccessFactors, a SaaS provider of human resources services, which SAP bought for a whopping $3.4 billion three years ago. He knows a bit about what companies want from these services.

“I have personally met half of the people who make HR buying decisions, and I can say they all want what Zenefits offers,” Larsgaard said in an interview.

What he loves about Zenefits co-founder Parker Conrad is the “ferocious velocity with which he thinks about product and then builds that product. That is unseen in this industry — in Siebel, Workday or SuccessFactors,” he said. “He does not get hijacked by some analyst’s opinion of what shoud be done.”

Conrad said he is motivated because at his last startup he hated, hated, hated doing the drudge work of setting up new employees. “I knew if I hated it that much others do too.”

His solution is to outsource and automate all the benefits-related rigmarole for new employees — the selection and set up of health,vision and dental insurance, 401K,s etc, said Zenefits co-founder Parker Conrad. Zenefits gets paid not by the end-user company but by the insurance companies and back-end providers of the services offered. It competes not directly with Workday, which targets huge companies, but the hundreds of thousands of smaller businesses out there who might otherwise use traditional insurance brokers or Professional Employer Organization (PEOs) like Trinet, that provide similar services but can cost thousands of dollars per employee, Conrad said

Zenefits plans to staff up to build more services and boost sales and support. There are 42 employees now, a number that will probably double in a year. This new cash brings total funding to $17.1 million.

]]>Bromium, a startup that built a micro-hypervisor that isolates workloads on your computer, now has $40 million in new Series C funding to expand sales worldwide and to bolster product development.

As GigaOM has reported, the company — founded by Xen hypervisor co-creators Simon Crosby (pictured above) and Ian Pratt as well as Guarav Banga — aims to isolate and harden different tasks on your computer without injecting complexity for the user.

Bromium’s Microvisor uses the hardware virtualization in Intel CPUs to create what the company calls “micro-VMs” that launch each time the user opens an application, clicks on a link or downloads an attachment. The micro-VM uses just the resources required by the job at hand and then evaporates when it’s over. The idea here is that because the jobs are isolated, small and ephemeral, this risks of malware attacks are limited.

The new round was led by Meritech Capital Partners, with contributions from existing investors Andreessen Horowitz, Ignition Partners, Highland Capital Partners, and Intel Capital.

]]>Keen on giving up food for the rest of your life? Soylent, which claims to be a complete meal replacement, has received $1.5 million in seed funding ahead of its December launch from Andressen Horowitz and Lerer Ventures, according to TechCrunch.

Other investors to the round include Reddit cofounder Alexis Ohanian and a mix of Y Combinator partners — Harj Taggar and Garry Tan at Initialized Capital and Jack and Sam Altman at Hydrazine Capital. Soylent’s creator, Rob Rhinehart, plans on using the money to turn Soylent into a fully fledged business by moving to Los Angeles from San Francisco and working on manufacturing the product in-house to fulfill the thousands of preorders already made through the company.

Rhinehart has gone through many iterations of Soylent to achieve maximal nutritional value, and says it now contains a careful balance of raw carbohydrates, proteins and fats, as well as vitamins and minerals. Soylent users receive their new food source in resealable bags and prepare the mixture by mixing the powder with water and a recommended amount of grapeseed oil. Many who have posted anecdotally about taking the “Soylent Challenge” stress creating a recipe for the (otherwise bland and chalky) liquid, although Rhinehart stresses to TechCrunch that the company is focusing on improving the product’s taste and mouth feel.

In testing, reviews have been mixed. Tech journalist Shane Snow praised the meal replacement after committing to it for two weeks, while Greatist CRO David Tao experienced indigestion and health problems after struggling for just three days. But these tests alone have been the driving reason to transform Soylent from a solo experiment to a mass-producing company — Rhinehart has already been able to take his product past the “Will you do it?” stage, and many are lining up to see if they, too, can become unburdened by food.